Forfaiting the green card.

[curiosa1953]

Good morning.

I have a client that forfeited his green card just few weeks before the citizenship interview. He sold the house and returned to Italy in July 2021. He received the official letter from HS on December 31st. How can I file his return? He says that if he filed for more than 7 years he will be obliged to file in US forever so he is pressing me to file in may (I filed the extensions though).

May I still consider him a resident for 2021 giving him all the benefits and reductions or do I have to look at the status on 31st of December and file as NR?

[itonewbie]

Expatriation is a very technical subject matter and doing any part of that wrong could have serious tax implications.  Both you and your client could be on the hook for substantial tax exposure and penalties.

The fact that you use the word "forfeit" implies you are probably not familiar with the technicalities.  You then quoted your client's statement about more than 7 years and filing forever if the return is not filed by May and you went on to file an extension - that suggests you have not done sufficient due d to protect your client and that you either misunderstood what your client told you or that your client had the wrong understanding of the law.

Suggest you first read through the following in details and come back if you have more questions.  When you do come back, please tell us (1) what action(s) your client had taken and when and (2) what kind of official letter he received from DHS on 12/31 (what a coincidentally clean date!) and what it says.

In case you decide that you are not comfortable handling this, you should seriously consider referring your client to someone else.

https://www.irs.gov/individuals/international-taxpayers/expatriation-tax

https://www.irs.gov/publications/p519#en_US_2021_publink1000222369

https://www.irs.gov/forms-pubs/about-form-8854

[TaxGuyBill]

I think this link from Publication 519 gives the details about that:

https://www.irs.gov/publications/p519#en_US_2021_publink1000222182

No, filing for more than 7 years does not mean he is required to file US returns forever.  But there is an 8 year rule that could require some additional things, so I suspect that is what your client is referring to.

https://www.irs.gov/publications/p519#en_US_2021_publink1000222182

EDIT: Oh, I had this window open too long and Itonewbie answered it several minutes ago (with a much better answer, as he is highly experienced with this subject).